Labour’s fraudulent claim

Labour are attacking National on welfare fraud and tax dodging. This image is being promoted on Facebook and Twitter, labeled “National priorities”:

Tax dodging


Leader David Cunliffe has joined in:

Welfare fraud, $23 million = National obsession. Tax dodging, $6 BILLION = National doing nothing.

National has not done nothing on tax dodging. The current (and previous) Government put a lot of resources into trying to reduce tax avoidance and the prevent tax evasion and identify evasion and take action against those who break the law.

From the IRD Annual report 2013:

Improving Compliance

  • The Court of Appeal unanimously held that the Optional Convertible Notes (OCN) arrangement entered into by Alesco and 12 other taxpayers, involved tax avoidance. The total amount at issue in all OCN cases is over $300 million.
  • We released Inland Revenue’s Interpretation Statement on tax avoidance which gives greater certainty to our customers.
  • This year, we collected tax revenue of $53.8 billion and $1.2 billion of other revenue. This is a 10.0% increase from the previous year.
  • Our information sharing has enabled the Ministry of Social Development to cancel more than 3,000 benefits being paid to people who were not entitled to them.
  • This year, total overdue debt increased by 1% compared to an increase of 7% in each of the previous two years.
  • We had a 3.5% decrease in the number of outstanding returns. This is the first time we have seen a year-on-year
  • reduction in ten years.

On avoidance:

Avoidance is where taxpayers seek to reduce or even eliminate their obligation to pay tax. This often involves structures with complex financial arrangements between companies, trusts, or charities, sometimes with international links. Our approach to countering avoidance has been to:

  •  gather intelligence and conduct research on inappropriate use of these structures
  •  assist and educate taxpayers if they are unsure of their obligations
  •  investigate their tax affairs and take legal action where there is deliberate non-compliance.

Recent judgments have generally upheld our position on avoidance and we have a firm legal basis that supports our view.

Tax avoidance interpretation statement

On 1 July 2013, we issued Inland Revenue’s interpretation statement about tax avoidance following a public consultation period which opened in December 2011. The statement now gives both Inland Revenue and the tax community greater certainty on the principles that Inland Revenue will apply in reaching a view on whether an arrangement is tax avoidance or not.

The report details a number of cases and business categories where they are addressing avoidance issues.

A large proportion of the core outstanding debt is not from ‘dodging’ or avoidance, it is from penalties and interest:

IRD core debt

It could legitimately be argued whether National puts too much emphasis on welfare fraud, or too little effort into tax ‘dodging’ .

But claiming the total overdue debt of $6 billion is all due to tax dodging and claiming that National is ‘doing nothing’ could amount to political fraud.

Overstating things and making false claims detracts from the point Labour is trying to make – and it’s dishonest.

Update: Chester Borrows (Minister for Courts, Associate Minister of Justice) has tweeted:

Welfare fraud budget flat after 40% up under Lab, tax fraud budget up 40% under Nats. Actions speak louder than words mate.

Leave a comment


  1. specialk1

     /  29th April 2014

    liar liar pants on fire

  2. specialk1

     /  29th April 2014

    Will this affect us benes?

  3. chinamannz

     /  30th April 2014

    I like Labour cause of the young bots you meet

  4. specialk1

     /  1st May 2014

    I been on the dole for 17 years. I just spend my days on TMMB pushing the lefty barrow. I’m all for equality. Every man should be bi sexual.


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